Thai Economic Council Issues Alert Over Venezuela Conflict and Global Trade Volatility

 

 

NESDC warns of a "fragile" 2026 recovery for Thailand as US-Venezuela tensions and trade protectionism threaten to disrupt global supply chains.

 

Thailand’s National Economic and Social Development Council (NESDC) has heightened its monitoring of civil unrest in Venezuela, warning that the situation has become a "new risk factor" capable of destabilising an already volatile global geopolitical landscape.

 

In a briefing regarding the 2026 economic outlook, the Council noted that the potential deployment of United States military forces for operations in Venezuela risks igniting a broader regional conflict.

 

This emerging tension adds a fresh layer of uncertainty to a global economy already strained by protracted wars in Ukraine and the Middle East.

 

 

 

A Fragile Recovery

The NESDC has projected that the Thai economy will grow by a modest 1.2% to 2.2% in 2026, with a midpoint of 1.7%.

 

This forecast suggests a recovery that remains "fragile" and susceptible to external shocks.

 

Danucha Pichayanan, the secretary-general of the NESDC, emphasised that the nation must brace for a challenging year.

 

"Geopolitical risk is a paramount issue that we must watch closely," Danucha stated. "It remains a significant threat on the global stage, with the potential to trigger widespread industrial disruption."

 

 

The Threat to Global Trade The Council’s report highlights a shift in the global security environment, noting that several European nations have begun increasing military budgets and considering expanded conscription in response to ongoing conflicts.

 

Of particular concern is the impact of these tensions on "trade sentiment." The NESDC warns that a prolonged conflict in Venezuela, coupled with existing trade protectionism from major economies, could lead to:

 

• Increased import costs due to aggressive trade barriers.
• Severe disruptions to international manufacturing supply chains.
• A slowdown in global trade volume, projected to drop from 3.4% in 2025 to just 2.3% in 2026.

 

 

 

Inflation and Interest Rates

The NESDC anticipates that inflationary pressures will rise in 2026 as businesses pass higher operational and trade costs on to consumers.

 

This trend is expected to force major central banks, most notably the US Federal Reserve, to delay planned interest rate cuts.

 

 

For emerging markets like Thailand, this signal points toward continued currency volatility and fluctuations in international investment flows.

 

 

 

Energy Market Outlook

Despite the geopolitical gloom, the Council offered a more neutral outlook for energy.

 

Average Dubai crude oil prices are expected to trade between $58 and $68 per barrel, a slight decrease from the 2025 average of $68.

 

This projected decline is attributed to a slowdown in demand from the US and NESDC cautioned that these price estimates remain highly sensitive to the "unpredictability of geopolitical strife," which could trigger sudden price spikes if diplomacy fails.